The forecast of the government of the PRC: GDP growth in 2016 will amount to 6.5-7%


BEIJING, March 5. /Corr. Alexey Selishev, Oleg Trutnev, Andrey Kirillov, Anton Marinin, Oleg Ostroukhov/. China’s GDP will grow in 2016 to 6.5-7%. This was reported in the report on government work presented at the annual session of the national people’s Congress (NPC).

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“The growth target of the economy in 2016 will be 6.5-7%”, – stated in the document. “The primary objective of maintaining stable growth is the preservation of employment and the welfare of the people. Growth at 6.5-7% will allow for sufficient employment in full”, – stated in the report. “The target this year is China after building a strong middle of society and takes into account the need to deepen structural reforms,” the document says.

For the period of the 13th five-year plan (2016-2020), the government predicts average annual GDP growth of 6.5 per cent. Thus, by the end of the new five-year plan, China’s GDP will reach approximately 90 trillion yuan ($13.8).

In China, a gradual slowdown in the growth of the national economy. So, in 2010 this indicator was at level of 10,4%, in 2011 – 9.2% and in 2012 of 7.8%. By the end of 2013 the pace of China’s economic growth slowed to 7.7%, and in 2015 they amounted to 6.9%.

Budget revenues

According to the report of the Ministry of Finance of the PRC, the country is expected to slowdown in fiscal revenues.

“Because in China the main source of tax revenue is the turnover tax, as slower economic growth and a continuous decline of producer price index growth rate of fiscal revenue decline more than the decline in the growth rate of GDP, – stated in the report. – Apparently, the financial situation in 2016 will be more severe, and the pressure of maintaining a balanced budget of income and expenses is extremely strong.”

The forecast for the budget deficit

In 2016 the budget deficit China will amount to 2.18 trillion yuan ($334 billion). According to the report of the Ministry of Finance of the PRC, this is equivalent to 3% of GDP.

“In 2016 it is expected to continue an active financial policy, the document says. – This lies in the substantial reduction of taxes and levies cash”.

According to the Ministry’s forecasts, this year the tax burden on enterprises and individual entrepreneurs will be reduced by 500 billion yuan ($76,64 billion). This will happen as a result of the replacement of business tax by value added tax and the gradual elimination of administrative fees.

Investments in fixed assets

In the current year the volume of investments in fixed assets of China, excluding agriculture to grow by 10.5 per cent to $ 60,95 trillion yuan ($9,34 trillion). It is stated in the report of the State Committee for development and reform Commission of China, also presented at the annual session of the national people’s Congress (NPC).

Foreign direct investment

In addition, the report of the Committee reported that the estimated amount of foreign direct investment in non-financial areas of China in 2016 will reach $128 billion

“We need to improve the level of attracting foreign investment, increasing transparency in the field of Finance, Internet, education, logistics, manufacturing industry, encourage foreign investment to stimulate high-tech industries, promote the reform of the negative list for foreign investments”, – the document says.

The report also emphasizes that the verification system for foreign investments to their threats to the national economy should be improved.

The military budget

China’s military budget will grow in 2016 by 7.6% compared with the previous year and will amount to 954 billion yuan (about $146 billion).

The rate of growth in military spending this year will be the lowest for the past six years.

“In the past year, defence and army building have evolved considerably. In the new year we will be in close connection with the tasks of the party in depth to promote political construction in the army, strengthen the army through reform, capacity building, defence modernisation, defence to develop science, technology and the military-industrial complex”, – stated in the report.

On Friday, the official representative of the 4th session of the NPC of the 12th convocation Fu Ying noted that the size of the military budget China as dictated by the needs of defence and the situation in the economy. The same position was expressed by the official representative of the Chinese foreign Ministry Hong lei as saying that “defense construction must be in harmony with economic development”.

China’s spending on defence in 2015 planned at the level of 887 billion yuan ($144,2 billion at the exchange rate of March 2015), which is 10.1% higher than in 2014. The pace of China’s economic growth declined steadily in the last few years – from 10.4% in 2010 to 6.9% in 2015.

Inflation

This year, the growth rate of consumer prices will reach 3%. “China plans to restrain the growth of consumer prices within 3% in 2016”, – stated in the document.

The consumer price index (CPI) in China – a key indicator of inflation in the country in 2015 increased by 1.4%. In 2014 it grew 2% in annual terms.